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Brian Morris

May 14, 2009 2:04 AM

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Finance charges accrue daily through the date the payment in full is received, which is why the OP got finance charges.

Example: Your statement closes on the 15th of May and a new statement is mailed the next day. Your due date for the statement is June 10. You pay the balance in full from that statement on June 2. When your next statement cycles June 15, you are billed finance charges because you carried the balance from May 16-June 2, when you paid it in full. So when your statement prints on June 15, your interest is computed for the 18 days you waited to pay the balance in full.

9 replies

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gparlett

May 14, 2009 1:48 PM

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@Brian Morris: And how do you get out of this terrible cycle? You either call the credit card company to find out how much you owe exactly and then pay them over the phone or you simply overpay a little bit. I paid off my Chase card this month. Okay, well I thought I had paid it off, but then I got my bill and there was $2.08 in finance charges on the account. That's entirely fair because they loaned me money for interest. Its the deal we worked out when I signed up for the card. As soon as I got the bill I went online and made a $5 payment. Well worth it to overpay by a few dollars to get the matter settled without having to pick up the phone.

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Drew5764

May 14, 2009 5:26 PM

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@gparlett: Only if they're going to pay you interest on your overpayment, as they're accepting money that you are, in effect, lending them. If they don't want to compute the interest (I don't think you're able to get them to agree to an equally-absurd finance charge) they owe you, then they should only take the money they're owed.

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May 14, 2009 4:45 AM

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Perfect way of explaining it Brian. The OP still borrowed that money for X number of days, so he got billed interest every single day while the loan was still outstanding.

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t325

May 14, 2009 2:59 AM

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@Brian Morris: So when the June statement comes on June 15th and you pay that 18 days worth of interest, won't you get another statement in July for the interest from June 15th thru the date you paid it? Seems like a never ending cycle to me.

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Brian Morris

May 14, 2009 3:48 AM

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@t325: @t325: @t325: @skizsrodt: No. Closing an account means you are no longer requesting charging privileges. Under the terms of your card agreement payment are still due until paid in full AND finance charges accrue. You are borrowing money, afterall.. remember that.

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Francis Lalonde

May 14, 2009 3:47 AM

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No. The charge is written as interest in the system. I don't think it would apply interest on the interest, else the yearly interest % written on the contract would not be correct.

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May 14, 2009 5:41 PM

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@Francis Lalonde: You're exactly right. You don't charge interest on interest. It sometimes might seem that way if you have a high balance, but it's only because they apply your payments to the interest portion of your balance each month. Thus the cycle of digging yourself into debt begins...
Had he not paid the $130 and not had it waived, his next bill would've been $130+$39 late fee, no further accrued interest.

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May 14, 2009 2:11 AM

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@Brian Morris: So in other words, no grace period. The CSR should have been able to compute for the mark...er...customer the payoff amount for a payment sent on such and such day. Down to the penny.

I would have paid one cent less than that amount, just to see how many months they'd continue to send me statements, or if they'd send that one cent debt to a collector. The fun had would have exceeded the cost to my credit rating.

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May 14, 2009 9:25 AM

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When I canceled my landline with AT&T, they sent me a bill for around 33 cents IIRC, I was already fully entrenched in online bill payments by then, otherwise I would have ended up paying more for the stamp to mail the bill than what was due on the bill itself.

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itsgene

May 15, 2009 3:18 PM

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@lordargent: AT&T once sent me a final bill for 40¢. I called them to ask if they'd just waive it, as I'd pay as much in postage just to send it -- and they'd pay far more to process the tiny payment.
The customer service agent rather haughtily informed me that they'd taken people to court for LESS than that.
So, I wrote them a check for $1.00, and called them daily to ask them where my 60¢ refund balance was. They finally sent me a 60¢ check, and I never cashed it.
It made me smile to think that they probably spent $40 to process that 40¢.

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Brian Morris

May 14, 2009 3:41 AM

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@HurtsSoGood: There is a grace period. uYour \"grace period\" is from the date your statement is cut to the date your payment is due. Grace period is the period of time you have to delay making payment. It has ZERO to due with finance charges.

And making it a penny short is kind of assinine IMHO.

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dashjdot

May 14, 2009 1:46 PM

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@Brian Morris: Re \"grace period\": the point of a \"grace period\" is that you will not be hit with finance charges if you pay your statement amount in full before the due date. It has EVERYTHING to do with finance charges. HurtsSoGood is exactly right that they're providing no grace period.

And of course making your payment a penny short is kind of asinine -- that's why it's funny. You're the archetype of why I intentionally got a Consumerist ID instead of using my facebook ID.

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June 12, 2009 2:12 AM

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@dashjdot: Re \"grace period\": the point of a grace period is that you will not be hit with finance charges for a certain amount of time after a charge hits your account. It has nothing to do with the statement date. If you pay your balance in full within the grace period of any purchase, you will be charged no interest. If you have an outstanding balance outside of the purchase grace period, you will be charged interest for every day it remains outstanding.

The grace period applies both to new purchases and to interest. So if you pay off the interest within the grace period, you will not be charged compound interest. But if you wait to pay off the interest, you will indeed pay interest on interest.

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Mariushm

May 14, 2009 2:09 AM

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He should now pay $140, his account will have -$10 and at the end of the month he'll get a bill for -$5 or something like that (-$10 + interest on that $130 for the number of days until it was paid).

Still sucks. I would just close the credit card completely...

3 replies

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Brian Morris

May 14, 2009 2:11 AM

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@Marius H: Closing it does nothing. Most credit card companies bill for residual finance charges. Standard practice.

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May 14, 2009 3:46 PM

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@Brian Morris:But by closing it he doesn't have to deal with their predatory practices anymore. Why is it that so many people are willing to pay for the privilege of being screwed to death for every nickel and dime?

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your new nemesis

May 14, 2009 2:41 AM

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@Brian Morris: But if its cancelled, the charges should stop accruing then. In theory.

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May 14, 2009 2:54 AM

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@skizsrodt: Nope-not until it's paid off.

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May 14, 2009 9:31 AM

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@Coles_Law: But the OP said he paid it off...

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gparlett

May 14, 2009 1:49 PM

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@wildhalcyon: OP thought he paid it off, but he was wrong... now granted this month the balance on that card is $130 rather than $8500 so the interest he accrues on the balance will be much lower, but still.

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OldElvis

May 14, 2009 7:26 PM

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@gparlett: I used to get back at companies by over paying by 20 cents. They'd send me 3 bills showing a 20 Cent credit, and eventually they'd have to cut me a check for that same 20 cents. When I had a Filene's card that I could never used,( even though I paid every bill on time), I make sure I sent them another 25 cent check so I could keep doing this.

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May 14, 2009 2:13 AM

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Once he pays his balance in full for one month, shouldn't that reinstate the grace period (i.e. if you pay in full by the due date there are no interest charges)? If so, he won't be charged interest on the $130 and when he pays that amount by the due date he will finally have a zero balance.

2 replies

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Brian Morris

May 14, 2009 3:42 AM

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@yesteraeon: Yes, but the problem is, he revolved his debt (in other words, he let it carry from one statement to the next). THAT'S what triggers residual finance charges.

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bwcbwc

May 14, 2009 4:29 AM

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@Brian Morris: @tbonekatz: Yeah, this sounds like double cycle interest billing.

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67alecto

May 14, 2009 1:49 PM

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@bwcbwc: No, it isn't double cycle billing. That is where interest is applied retroactively.

Interest accrues on a daily basis. When the statement was mailed out, that was the balance as of that day. When the payment was received on Day X, his final statement showed the interest that accrued between the statement cutoff date and Day X.

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May 14, 2009 2:20 AM

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I used to be a Service Desk Supervisor at The Home Depot (a long, painful period in my career ;) ), and we used to have folks come in with complaints like this all the time. Usually, I would simply call the Home Depot Credit Card customer service using the Store-Dedicated line for the customer. Once I got a human on the phone, I'd ask to have the interest removed (Insert Magic Phrase Here) as a \"one-time only exception for a valued customer\". The only time that never, ever worked for me was when the customer in question had the same incident happen five or six times.

Sweet talkin' customer service reps goes a loooong way sometimes!

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nato0519

May 14, 2009 2:33 AM

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Their credit is by far the worst. I paid off my bill on a Tuesday and than decided on Saturday to do some other home improvement. I spent wayy less than my available balance to find out they lowered my available balance and that I would receive a letter they sent out the previous day. To bad it took like two weeks for me to get the letter. Thanks a lot Home Depot you saved me a lot of money since I'll no longer be spending a dime in your store. Plus you pissed off your associates who had to put back a lot of random items in my cart. Way to go!!

2 replies

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May 14, 2009 3:42 PM

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@nato0519:
I think it's interesting that people are so quick to soley blame Home Depot in this. Do you not realize that Home Depot does not service the credit card? HSBC does. HSBC is the one not giving you a grace period on your finance charges/interest. Don't blame Home Depot.
Further more, HD credit cards are not the only one's that are cutting their customer's limits. This is becoming a very common thing among several different credit card companies. You may not be happy with HD's credit card service, but it's not entirely their fault, look to the servicing company....HSBC.

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Megladon

May 14, 2009 2:17 PM

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most people dont know this but home depot stoped caring about its employees about the time bob nardeli became ceo, he has since moved on to destroy another company.

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rugman11

May 14, 2009 2:51 AM

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It's called \"average daily balance\". Every card I've had works this way. The charges won't be perpetual (they won't charge interest on your interest), but they calculated his average daily balance (which would have been $4250 if he had the $8500 balance for 15 days) and based the interest on that. Pretty common, really.

3 replies

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June 12, 2009 6:17 PM

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@rugman11: They will charge interest on the interest if it's not paid off by the end of the grace period (starting when the interest was charged/applied to the account balance).

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Brett Benedict

May 14, 2009 10:15 AM

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@rugman11: I don't know what an average daily balance is, but if I'm to take it literally wouldn't $4250 be and average balance if he had it for 2 days, not 15? Can you explain this to me?

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Anonymous

May 14, 2009 1:41 PM

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@Brett Benedict:

Let's assume a 30-day cycle. From days 1-15, balance = 8,500. Days 16-30, balance = 0. If you add the balances together and divide by 30, the average daily balance comes to 4,250. It is this figure the interest is calculated on.

Rugman is right, this is a very common practice.

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kduhtoe

May 14, 2009 2:52 AM

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What do you think his interest rate was to have $130 for one month in finance charges?

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May 14, 2009 2:56 AM

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About 20%, depending on exactly when in the cycle he paid it. It was $8500, after all.

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Anonymous

May 14, 2009 3:05 AM

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I won't offer an opinion of the quality of the Home Depot credit card, but what they did is standard practice in the industry. Your interest is calculated based on the average daily balance---the balance of your account on each given day of the statement period is added up, then divided by the number of days in that billing period to come up with the ADB. For example, you have a balance of 1000.00 at the start of a billing period, and you make a purchase for 500.00 on the sixteenth day. If there are 30 days in the billing period, your ADB is (15 * 1000.00) + (15 * 1500.00) / 30 days = 1250.00. It doesn't matter if you pay your account off the first day of a billing period, there will still be an ADB---using the prior example, you pay off a 1000.00 balance the first day, then your ADP becomes (1 * 1000.00) + (29 * 0.00) / 30 = 33.33; and you would still owe interest on that amount. Once you pay the interest owed on the next statement, then you are back to a zero balance.

Hope this helps.

2 replies

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dveight

May 14, 2009 7:37 PM

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@ForrestEurystheus: Hopefully this will help with the people on this site that have no concept of how credit and average daily balances works. This (non)issue has been discussed in the past on this site and I really do not see why this is even a story. I don't hate nor do I like Home Depot, but shoddy stories like this really needs to stop, since the Consumerist is basically wrongfully accusing Home Depot of doing something is common practice throughout the credit industry.

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Anonymous

May 16, 2009 6:46 PM

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I don't think it's a standard practice at all. I've had numerous cards over the years (currently have 5 credit cards from 5 different places) and not a single one of them charges interest on the average daily balance(ADB) if you pay in full each month. I pay each card in card in full, ALWAYS have an ADB, and ALWAYS pay $0 in interest. I use my cards all the time to generate rewards and I haven't paid a penny in interest in a couple of decades.

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waza0

May 14, 2009 3:17 AM

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why apply for a home depot credit card in the first place ?!

3 replies

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May 14, 2009 2:42 PM

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@waza0: someone who is doing a lot of home improvement?!

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MauriceCallidice

May 14, 2009 3:25 AM

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@waza0: I did it for the 20% off your purchase offer on a large purchase, a while back.

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May 14, 2009 8:23 AM

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@MauriceCallidice:

Same here, I got 20% off a refrigerator and \"no payments and no interest for 12 months.\" That is the only real reason to use such a card like that. Gives you time to spread that large needed purchase over a longer period of time with no extra cost.

Ofcourse it is a wasted effort if you don't pay off the entire amount in the time period as the interest actually still accrues. I dislike them using the term \"no interest\" in the manner in which they use it.

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Czum

May 14, 2009 5:34 PM

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@ShadowFalls: Yup - got 15% off of my hot water tank, paid in full the next month and literally haven't touched the card since (about 2 years).

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jayphat

May 14, 2009 11:55 AM

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@ShadowFalls: My previous employer had one for purchases while we were building our store. When we opened, we paid the entire thing off at once and closed it.

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haoshufu

May 14, 2009 3:20 AM

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It is called accrued interest.

2 replies

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gparlett

May 14, 2009 1:50 PM

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@haoshufu: Exactly. Issue closed. This should be a warning to consumers about how credit cards work, not a rip on Home Depot.

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MMD

May 14, 2009 2:56 PM

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@gparlett: Except that there are differences in how various credit card agreements work, so the additional lesson is that Home Depot's terms are stricter than on other cards.

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May 14, 2009 3:22 AM

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1st Financial Bank does the same thing. I sent them a check to pay off my balance in full and received a bill the next billing statement for like $20-something in finance charges. Since they charge a fee (!) for making payments online, the only way I could get rid of it at last was to send a check for a couple dollars more than I owed, forcing them to send me a check for a dollar or so back.

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May 14, 2009 3:27 AM

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When we paid off our Home Depot card last August, we were not billed another month of interest. We paid our new balance on the August atatement and that was it.
However, if you look on the back of your statement, there are 6 different ways that they calculate your average daily balance and the letter by your interest rate tells which one they use on you. One of which is two-cycle balance calculation. Maybe this is what he has?

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May 15, 2009 3:23 AM

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@tbonekatz: That happened to me, too. I paid off our HD card and there was no interest.

It was one of those \"no payments for 6 months if you purchase something over $299\" deals - and printed on the bill each month was the day the 6 month period ended. I made sure to pay it off completely before that date.

I'm not sure if this has any relevance to the OPs situation, though.

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Brian Morris

May 14, 2009 3:45 AM

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@tbonekatz: You must not havr revolved any portion of your balance.@t325: Correct. It sounds odd, but it takes two billing cycles to catch up because everything on a credit card is billed a month behind. So using my example, if they paid the interest on the June statement, they would be free and clear.

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May 14, 2009 12:02 PM

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@Brian Morris:
Actually, part of my balance was revolving and part was interest-free promotional.

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Brian Morris

May 14, 2009 3:52 AM

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@Brian Morris: @skizsrodt: No. Closing an account means you are no longer requesting charging privileges. Under the terms of your card agreement payment are still due until paid in full AND finance charges accrue. You are borrowing money, afterall.. remember that.

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Brett Benedict

May 14, 2009 10:14 AM

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@Brian Morris: You really need to learn how the commenting system works around here.

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May 14, 2009 3:28 AM

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@tbonekatz:
Aaarrgh! atatement=statement

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May 14, 2009 3:59 AM

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The IRS tried to do something similar to me until I called bullshit and they made it go away. Anything times zero is zero. That exchange showed me what idiots and extortionists they are.

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May 14, 2009 4:02 AM

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This tactic is called \"trailing interest\", and is very common. What isn't so common is the claim that they \"can't do anything\" about it. Here's the way out: ask them for a payoff balance. They may waffle a bit and tell you that it's only valid that same day or whatever, so get the payoff balance based on whatever date you're sure your payment will be received. For example, if you're paying right then, over the phone, your payment is received immediately. Online banking payments generally post in 1-4 business days. A check (depending on where and how you're mailing it) can take longer. Estimate conservatively, and pay the payoff amount they quote based on that date. If they claim they can't tell you, talk to a supervisor. Or, figure it out yourself: the interest will be your APR divided by 365, times the number of days that elapse between your statement date and the date you're paying, multiplied again by your principal amount (your current balance).

PLEASE NOTE: This claim that interest will accrue on interest is only PARTLY correct: they can't charge you interest on interest until it becomes part of the principal. Usually, your cardholder agreement states that the interest will become part of the principal at the end of every statement. Thus, if you incur finance charges of $130 after you paid off the balance, paying off that $130 before the due date on your statement should be the last payment you make.

But even more important: the squeaky wheel gets the grease. If you pay off your balance and can honestly tell the credit card customer service rep that you requested a payoff balance and that's what they quoted you... you have grounds for them to waive the finance charges, which is one fee they have the most leeway over, anyway. If they refuse, ask for a supervisor, who often has the authority to do so. DON'T LOSE YOUR TEMPER. Upsetting a customer service rep who CAN help you but doesn't HAVE to won't do you any good. Worst-case scenario: thank them, hang up, and call back. You wouldn't believe how often this will work. Just because two out of five representatives say no doesn't mean the other three will.

Good luck!

3 replies

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May 15, 2009 5:04 PM

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@Ezra Ekman: Thank you! I was shocked to find out just yesterday that I'm in the exact same position and was wondering how I was going to actually pay this off! I came back to this story hoping someone would be able to help.

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RobbieS

May 15, 2009 9:15 PM

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@jessemoya:
This is too funny! Same thing happened to me today too!
I have a BofA CC card, and called and they gave me the spiel, explaining it, and I just said \"Then why didn't the bank associate tell me about this when I asked to pay off the card?\" At that point, the CSR offered me a credit for the balance ($1.94), so hopefully that's the end of that.

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May 14, 2009 2:27 PM

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@Ezra Ekman: \"For example, if you're paying right then, over the phone, your payment is received immediately.\"

Remember that paying over the phone usually incurs a $15 fee for most card companies...

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roopesh

May 14, 2009 6:27 AM

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I agree with everyone above that this is common and not specific to Home Depot. I would suggest using their online features and look at the balance the day the statement is issued and pay that the same day. I had a similar struggle to pay off a Bank of America card and online banking was the only way to get to true zero otherwise I kept getting hit with (smaller and smaller) interest of interest payments.

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May 14, 2009 8:54 AM

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Before I would let ANY credit card go that high I would contact a bank, or banks if necessary, and see about getting a loan from them. It is much cheaper if they will approve it. No credit card should have thousands of dollars on them.

4 replies

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May 14, 2009 2:51 PM

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@Smorgasbord: My job requires lots of travel, so I often have $10K plus Amex bills. They get paid off in full every month, though.

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May 14, 2009 2:28 PM

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@Smorgasbord: Banks typically don't loan money for appliances, tools, etc unless you are a business buying scores of the products...

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May 14, 2009 1:29 PM

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@Smorgasbord: Unless said card has a lower interest rate then a bank loan.

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May 14, 2009 2:29 PM

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@shockwaver: Which is almost impossible...

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chiieddy

May 14, 2009 9:57 AM

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Ugh double cycle billing. I do hope they make this illegal VERY soon.

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67alecto

May 14, 2009 1:51 PM

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@chiieddy: Nope. Not even remotely close to double cycle billing.

This was interest that was accruing between when the statement was mailed and when the payment was received.

Don't be an ignorant consumer...

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wcnghj

May 14, 2009 10:37 AM

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It is NOT double billing.

Statement Cuts: New Balance-$8500

x number of days pass, grace period long passed, average daily balance.

OP pays $8500

10 days later new statement cuts and ADB was 4000 and intrest gets charged on that

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May 14, 2009 11:14 AM

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IMO there's nothing wrong with this practice. The merchant is entitled to interest on the amount it loaned you until it is paid. In my experience, interest will not be charged on a balance which is interest only if it is paid off by the end of the next billing cycle.

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May 14, 2009 12:14 PM

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Send them 1300 ten cent checks.

2 replies

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CFinWV

May 14, 2009 12:57 PM

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@winstonthorne: And this would solve what....? Checks aren't free, neither is postage.

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MMD

May 14, 2009 2:57 PM

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@CFinWV: How about 1300 online bill payment transactions? ;-)

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LuvJones

May 14, 2009 12:14 PM

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I think with the new legislation coming our way (maybe... maybe not)there should be laws regarding what is on each statement. There should be a payoff amount on each statement. Nissan did this on every statement, and we paid off the car early with no worries about the amount due. This would solve the problem completely.

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Anonymous

May 14, 2009 12:18 PM

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Chase does this. I recently paid off a Chase Mastercard, I believe the last payment was in the neighborhood of $100. The next statement I recieved had a finance charge of $1 and some change. When I called I asked them if they really expected me to send them a check for $1 and they said I could pay online, which I suggested was still rediculous and the csr offered to waive the charge. As they explained it the finance charge was from the month prior, before I paid of the balance.

I promptly closed that account.

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Anonymous

May 14, 2009 12:24 PM

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Their \"special finance\" promotion sucks also. We closed our account with them after learning the way the handle their special financing promotion. After being bombarded with finance charges, I called home depot and asked why our extra payments weren't being applied to our special promotion. She told me that in order for extra payments to be applied to the promotions we had to call them first...no where could I find this on the credit card bill and all the fine print

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Shaffer112

November 18, 2009 4:52 PM

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@YvesEscardadente: That's a legal requirement... If you have a non-promotional balance that's actively accruing interest, they can't automatically allocate your payment to a promotion that's not currently causing you to be billed interest. That's illegal. Your payment has to be automatically allocated to your balance with the highest interest rate, per OCC requirements.

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Anonymous

May 14, 2009 12:27 PM

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Sorry, this is perfectly normal and legal. The terms say that if you pay it off after the first bill there is no interest. If you float a balance than even when you pay it off you will owe for the interest for that period. It should be pro-rated based on the average daily balance for the period, but you owe it. That's the way it is.

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Alessar

May 14, 2009 1:04 PM

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The correct way to pay off a card (at least when you're going to close it and want no further interest) is to phone up and request a \"Payoff\" amount. They will tell you exactly how much your need to pay -- for instance your current balance + some days worth of new finance charges -- and then \"lock\" your balance in at that rate for 7-10 days to allow you to mail in your payment. (It depends on the card, your balance, and when in your billing cycle you're calling.)

One time I called and asked for a Payoff on a department store charge and the phone rep didn't understand and just told me my current balance. I asked him repeatedly but he just gave me my balance. So, I paid it and the bill cycled and I had $5 in interest the next month. I called back and the rep I got that time *immediately* understood the situation, quickly got manager approval and just voided the $5 interest charge and closed my account.

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May 14, 2009 1:15 PM

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This nothing new. When paying off a loan or card balance you should ALWAYS call the debtor and get a 10 DAY PAYOFF QUOTE to avoid this sort of perpetuation.

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May 14, 2009 1:58 PM

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It's very easy to estimate finance charges needed to payoff a card with daily interest like this (Retail Residual Finance Charges, in old MBNA lingo):

-Look at your most recent statement and see what the finance charge was
-Add that amount to your payment (if you get the payment their well before the due date, you may overpay a little and get a credit check mailed out)

This is also useful for people pushing their limit and not sure if a finance charges will put them overlimit when the absolutely must charge $20 of their $25 available credit.

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JGKojak

May 14, 2009 2:21 PM

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Seems like mathematically impossible to pay off schemes should be ... uhhhh.. illegal???

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kexline

May 14, 2009 2:40 PM

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This happened to me with E-merge recently and, unlike this company, they were beyond agreeable about it.

I paid my balance in full and was surprised to receive a bill for $38 in interest the next month. Got them to write it off, and was astonished to receive a bill for $0.03 the next month. (Their billing software developers should be beaten for that, by the way. It would have been much cheaper to write that off than send me a bill.) Anyway, I called them again, they wrote it off again, and finally, I received a payoff notice.

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grebby

May 14, 2009 4:14 PM

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Same thing happened to me when I paid off a Citibank credit card. I got a bill for the last ~$12 in interest, so I sent them $13 to cover the interest on the interest. For three months they mailed me a statement showing a positive balance of 50 cents, and then they sent me a check. For 50 cents.

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May 14, 2009 3:20 PM

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Every card I've had has waived the payment for \"interest only\" statements. They usually make a big deal about how they're doing me a favor, which I never understood because I figured everybody did it.

This is similar to paying off a house or a car. You call to get the amount you owe, you send in the check and you're still short -- why? Because interest accrues in the intervening time. Home Depot will send you a statement on the 10th saying what you owe, you send a check immediately and it arrives a week later. They promptly deduct the amount you paid from the amount in the account -- and you're on the hook for 7 days of interest unless it's waived.

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May 14, 2009 3:31 PM

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This happened to me with my BoA Platinum card. I did a balance transfer to another card for the full balance and because of double billing cycles, I had an addition $12 to pay off the following month. I paid that $12 after an angry phonecall with them and so far it has stayed at a $0 balance.

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Anonymous

May 14, 2009 3:43 PM

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It's a B.S. policy to not have grace periods, but since there are none, the customer service rep is correct, to stop getting a perpetual bill, estimate how much extra interest will be after the last statement. This way you've paid off the statement, and the extra interest, and so the next statement will be zero. If you overpay, you will get a refund. I know this is B.S. but you can do that and stop getting apoplectic about it.

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May 14, 2009 4:16 PM

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Since when do credit cards charge a daily interest rate? Student loans do that crap and as a result you basically have to over pay your final amount owed due to the daily interest they charge you between the time you submit payment and the 48+ hours it takes the payment to post. But I have yet to see a credit card that lists a daily interest rate and bills you that way. If interest is accrued at the end of the month and you pay it off before the end of the month, no interest should be accrued.

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SacraBos

May 14, 2009 4:51 PM

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If you over pay, they will hold you money for a few months before mailing you a check - with no interest.

I think you ought to pay $260, then call and demand they pay you the 21% interest on your negative balance.

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AustinTXProgrammer

May 14, 2009 5:05 PM

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If you pay it off the next month it will go to 0, but still stupid (all Citi cards seem to be like this).

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redhelix

May 14, 2009 5:33 PM

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Citizens pulled that junk on me with my Overdraft account. I told them to go pound sand and moved everything over to ING.

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Anonymous

May 14, 2009 8:24 PM

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Why is it wrong for businesses and banks to charge interest? If you don't take out a loan (which is what using a credit card is) then you won't have problems in the first place.

If you need to use the credit card, or like the 0% offer, then pay off your balances every month and/or pay off the original amount in the period specified. If you fail to do this I do not see why it's a huge deal to be charged finance charges. You can squabble all you like at the practices, but at the end of the day YOU decided to take out that loan.

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bbb111

May 15, 2009 7:03 AM

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Nicholeigh stated: \"HSBC is the one not giving you a grace period on your finance charges/interest. Don't blame Home Depot.\"

I blame both. Home Depot chose a card processor that has consumer unfriendly policies. This means that Home Depot values whatever benefits they get from HSBC more than treating the customers well.

I don't know if they understand the cost of unhappy credit card users who blame Home Depot. For a business, it is a cost/benefit situation - they MIGHT have decided that the benefit of the deal with HSBC is greater than the cost of losing some customers. More likely, the people who negotiated the credit card deal have no accountability to customer satisfaction and customer retention - they get a bonus for making a \"great deal\" and the customer retention department gets yelled at for losing customers. [I've seen this type of situation many times and upper management rarely understands what is really happening.]

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May 15, 2009 7:44 AM

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To avoid the average daily balance, you really need to call them up and ask what the \"total payoff amount\" would be to avoid further interest charges. I recently was able to pay a bunch of credit cards off, but I also got new statements with new balances which were the interest I was charged. I called Capital One to complain, and asked how to avoid it, she said that it $2 more than my statement balance because of when I called. If I waited 5 more days, it would be $4 more. I paid it, and then had to go through the same deal with the other cards I paid off.
It's kind of like refinancing you home. There's a payoff statement that says, you own use this much, which is principle, and the interest so far for the month, plus taxes and such.

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May 15, 2009 4:15 PM

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I had this happen. I paid off about $1,300 owed, in full. The next month there was about $23 owed, I figured that was a little interest owed during the period during which they awaited payment so I paid that off in full as well.

The next month they said I owed 17 cents more. (For those keeping track, that's interest on the interest on the interest.) I called my credit card company and they wiped it out and any further payments.

I left the account open but the card is still unused since then.

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bryus

May 16, 2009 6:18 AM

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I was just enjoying the replies to my story. I just wanted to add a few points.

If this is such common practice then why have I paid off many cards which had carried a balance for an extended period of time and never had this happen? I've had several cards from several banks and when I pay the balance before the due date I get a zero balance on the next statement.

I paid off the full balance on the Home Depot website (run by Citi) and the balance due on the day I paid it off was the balance on my statement.

This did happen with a Dell financing deal once but it was a different kind of credit offer.

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Anonymous

May 16, 2009 10:24 PM

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Just wanted to say that I have usually made purchases with my Home Depot card under their \"6 months\" or \"12 months no interest\" plans and when I pay whatever that balance is prior to the expiration date I have never had a single problem. I actually think my Home Depot account(save the higher interest rate of a store style card) has a pretty good practice. I have had similar cards that if you have any other balance on the card they will NOT apply money to the promotional amount due to expire first until the entire balance is paid which is so not cool, but legal. I actually think it is a very generous policy by them to allow me to pay off the \"expiring promotional balance\" in full even if I have any other balance on the card. Just wanted to add my 2 cents.

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Shaffer112

November 18, 2009 4:52 PM

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It's not perpetual interest, it's an average daily balance and the interest that's charged on this. This happens one time and only on the month following your pay off. That interest doesn't earn more interest.

You bring up what you think is a negative, but you also don't include the 6-12 month promotions they offer every day where you wouldn't pay a penny of interest if you pay the card off within the promotional period. Also, you don't mention that they send out 10% discount post cards like candy.

I've had my home depot account for years and have no complaints.

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